The retail sector in most parts of the world is struggling by all accounts. Increasing online shopping competition has hit hard on brick – and – mortar retailers. Environmental concerns have led customers to question traditional packaging practices and agricultural practices. And the growing preference for “experiences” over stuff by many consumers, especially younger ones, has eaten into overall demand.
Everywhere we see the bad news: Sears, Nine West shoes and David’s Bridal all filed in 2018 for bankruptcy. House of Fraser and HMV were sold for a song in the United Kingdom. Insolvencies from designer BCBG Max Azria to discount shop Poundworld are striking up and down the value chain. With these failures, job losses came as shoppers had fewer reasons to visit, and further pressure on malls and high streets.
But the opportunity comes with adversity. It gives those with creative solutions a chance to shine when a sector is under pressure. Amazon emerged stronger from the dotcom bust of 2001, and decades earlier, when their dominance was challenged by better – made Japanese imports, the big three US carmakers ultimately improved their offerings.
There is some hope that today we may see such a resurgence. So many of the strongest candidates for the Boldness in Business awards this year were retailers that one of the judges was moved to observe that we could see a “retail renaissance.” The winners impressed us with how they responded to everything from the challenges of the supply chain to environmental degradation.
Two of our winners emerged from the grocery sector, which was hit particularly hard by changing shopping habits, worries about waste and margins being squeezed. The entry of Amazon into the sector, as well as the spread of discount chains like Lidl and Aldi, has put pressure on supermarket groups to cut costs and make convenience better.
Ocado, the UK technology category online grocer and winner, has been around for 19 years. But over the past two years it has come into its own, winning contracts to set up competitors ‘ robotic warehouses and e – delivery services, including Wm Morrison in the UK, Casino in France, Sobeys in Canada, and Kroger in the US.
Under the deals, Ocado will deploy the robotic technology it has developed to improve other retailers ‘ online services for its own business. In other words, by helping less technologically advanced companies adapt to the shift to online shopping that damages so many of their competitors, it has created a bright spot in the general retail gloom.
The other grocery winner, Iceland Foods, has taken the corporate responsibility / environment award for his efforts to combat plastic waste and the environmental degradation associated with palm oil use. Iceland, based in the UK, focuses on frozen food and value. It has long sought to woo customers concerned about health and the environment— the first major UK supermarket in the 1980s was to remove artificial colors and non-essential preservatives from food and ban genetically modified foods.
It caught the eye of the judges for their TooCoolForPlastic campaign to replace all plastic in their own – brand packaging within five years for this year’s awards. It has stopped offering single-use bags, removing plastic from 85% of packaging, including egg cartons, and trialing reverse vending machines giving customers a 10p voucher for each empty plastic bottle they put in. Iceland’s campaign against palm oil, which saw the ingredient removed from its own – brand foods in 2018, got a big boost when advertising regulators banned its Christmas advertisement as “too political.” The video has received millions of views on YouTube and social media, featuring an animated orang – utan and highlighting the problem of deforestation. The next effort by Iceland will be to promote sustainable fishing by selling “by – catch” fish species that are unintentionally caught and usually thrown back into the sea as uncommercial.
The campaigns helped this relatively small player stand out — like-for-like sales rose by 2% in the last reporting period, and for the second year in a row, Iceland was named the UK’s top customer service supermarket, highly scoring for “emotional connection” and “ethics.” The results suggest that retailers can thrive in competitive markets if they offer a real reason for buying there.
In this year’s competition, the final retailer to win, Fast Retailing, took the prize in the category “Drivers of change.” Owner of the brands Uniqlo, Theory, J Brand and Comptoir des Cotonniers, Fast Retailing is the third largest casual fashion seller in the world, behind Zara, owned by Inditex of Spain, and H&M of Sweden. Unlike those fast – fashion chains that are restored daily and criticized for encouraging waste, Fast Retailing offers fewer but more classic pieces — those that are designed to last several seasons but are affordable due to the efforts of the company to keep costs down. Fast Retailing is now leading the way in automation, one of the first Japanese retail groups to go global. It set a target of 3tn ($ 27bn) annual revenue by 2022, up from the projected 2.3tn yen for 2019.
Ocado, Iceland and Fast Retailing are all well positioned to appeal to millennial customers who do more online shopping proportionately and place greater emphasis on wanting their own reflective corporate values. These firms serve as a reminder that the ones that benefit when change hits hard, well – run, well – positioned firms.